Elements of contract in business law refer to the basic components that must be present for a legally binding agreement. These elements include an offer, acceptance, consideration, intention to create legal relations and legality of purpose. In order for a valid contract to exist, all parties must understand the terms and possess the capacity to agree to them. All contracts contain certain legal provisions which are based on the context in which the agreement takes place. Ultimately, an effective and secure contract requires an understanding of the law and its application to specific contract elements.